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SBI pips peers in deposit growth

Economic Times
Tuesday, April 07, 2009

MUMBAI: State Bank of India (SBI) recorded its biggest gain in the market share of deposits in the quarter following the Lehman Brothers' collapse. The country's largest bank grabbed a market share from all industry segments, including other nationalised banks, private banks and foreign banks.

The Reserve Bank of India numbers show that SBI Group's share of bank deposits jumped from 23.2% in end-September 2008 to 24.4% in end-December 2008. The enormity of the gain in market share becomes clear when viewed in context of the overall deposit base of Rs 35,69,352 crore, as on end-December.

There are two reasons behind SBI's growth in market share. SBI was the biggest gainer in the 'flight to safety' phenomenon observed after the collapse of Lehman. With rumours about banks being in trouble, investors shifted funds away from foreign and private banks into government banks.

And among the government-owned banks, SBI managed to wrest market share because it offered higher returns on term deposits through a special scheme. The bank continues to provide the higher returns on long-term deposits of 1000 days compared to most other nationalised banks.

In the post-crisis quarter, even large corporates like Infosys moved their deposits to SBI. Infosys has disclosed that it transferred deposits of nearly Rs 1,000 crore from ICICI Bank to State Bank of India last year.

Data released by Reserve Bank of India shows that the share of nationalised banks in bank deposits dropped from 48.6% to 48.3% in the October-December 2008 quarter. During the same period, the share of private banks fell from 19.4% to 18.6%. Foreign banks saw their share of deposits dip marginally from 5.8% to 5.7%, while rural banks registered a slight gain from 2.3% to 2.9%.

However, when it comes to bank credit, the picture is slightly different. Nationalised banks were the most aggressive lenders in the October-December quarter, with their share of bank deposits rising from 47.9% to 49%.

SBI's share of bank loans remained unchanged at 23.4%, while private banks and foreign banks saw a dip. In end-December '08, private banks accounted for 18.7% of credit as against 19.4% and foreign banks had only 6.6% of bank loans compared to 7.2% earlier.

Corporates rushed to public sector banks for loans in the October-December '08 quarter as funding from international markets and local bond and equity markets vanished. Foreign lenders also scaled down their exposure to the lower end of the retail segment and did not grow their corporate business because of the global cash crunch.

Sources :: State Bank of India